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OECD Economics Department Working Papers

Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

The Wage Premium on Tertiary Education

New Estimates for 21 OECD Countries

This paper presents cross-section estimates of gross hourly wage premia on tertiary education. They are
based on a unified framework for 21 OECD countries from the 1990s to the early 2000s and use
international household surveys to maximise international comparability. The results of the “augmented”
Mincerian wage equations point to an average hourly gross wage premium on completed tertiary education
of 55% in 2001 (country-gender average), translating into a premium of close to 11% per annum of tertiary
education. Wage premia display little variation over time but huge cross-country variation: at 6% they are
lowest in Greece and Spain (men and women) as well as in Austria and Italy (women) while reaching
14%-18% in Hungary, Portugal, and in most Anglo-Saxon countries. Given that the wage premium is the
single most important driver of private returns to education, the results presented here have potentially
important implications for policies that aim at increasing investment in human capital.